Ellaktor S.A. (ELLAKTOR) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I am Galie, your Chorus Call operator. Welcome, and thank you for joining the Ellaktor Group conference call and live webcast to present and discuss the Ellaktor Group's full year 2020 results. [Operator Instructions] And the conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Aris Xenofos, CEO and Vice Chairman of Board of Directors Ellaktor Group; Mr. George Poulopoulos, CFO of Ellaktor Group; and Mr. Dimitrios Koutsoukos, Director, Business Planning and Investor Relations. Mr. Xenofos, you may now proceed.

Good afternoon, ladies and gentlemen, and good morning to our colleagues joining us from the U.S. Thank you all for dialing in to Ellaktor's full year 2020 financial results call. Ladies and gentlemen, before giving the floor to Mr. Poulopoulos to get us through the financials of our group in a more -- in a great detail. I would like to take the opportunity of today's call and as a new CEO to center my opening remarks primarily on our initiatives and plans to be the Ellaktor's future while addressing the issues of the past. There's no doubt that 2020 turns to be a rather challenging year for Ellaktor Group with key financial figures starting below the figures of 2019. More specifically, group revenues stood at EUR 892 million in 2020 versus EUR 1.2 billion in 2019. Group EBITDA stood at EUR 30 million in 2020 compared to EUR 81 million in 2021. Although I have to underline that the above figure includes EUR 41.3 million of nonrecurring construction transformation costs. Group results before tax stood at minus EUR 149.7 million versus EUR 84 -- minus EUR 84 million in 2019. Group cash and other liquid assets stood at EUR 406 million versus EUR 463 million in 2019. And finally, net debt, excluding Moreas, which has a nonrecourse debt, stood at EUR 725 million at the end of 2020 compared to EUR 608 million at 2019. The above group performance was impacted negatively by the Construction segment, attributed primarily to slow project completion rates, to transformation costs, and the losses following a new pragmatic assessment of the budget of core projects. On the positive side, the steady contribution of renewables, concession, environment and real estate to group EBITDA continued with their aggregate contribution consistently exceeding on average EUR 200 million per annum over the past 3 years. Ladies and gentlemen, despite the challenges 2020 presented the group and the country with, there is a lot to look forward to in 2021. Most recently, Ellaktor's newly elected Board of Directors has proposed to shareholders a share capital increase of EUR 120.5 million. The negative results of Construction over the past years have been weighing on group performance and have commanded significant cash approach which justifies our decision to direct EUR 100 million of the announced share capital increase to Construction, which is in combination of the better monitoring and controls of the related products will solve its liquidity constraints. Solving Ellaktor's pressing liquidity needs will enable the group to pursue its growth strategy and investment plan in a macroeconomic context characterized by strong tailwinds for all group business units. The remaining EUR 20 million will be used by Ellaktor to finance new investments in renewables. Furthermore, we have set a list of priorities for 2021, which includes: the restoration of the competitiveness and stabilization of the performance of construction; the acceleration of the group's restructuring plan; the enhancement of controls; the procurement optimization; as well as the conclusion of the proposed share capital increase addressing the urgent liquidity needs of the Construction segment. This will enable the group to leverage the decades worth of expertise it has built and consolidate its leading position in sectors that will significantly benefit from EU and State funds. And finally, in regards to nonfinancial factors, we will strategically focus on the promotion of sustainable development through its business operations, on the enhancement of transparency of activities via the application of certified management systems and the establishment of a safe and healthy working environment for our people. And with that note, I would like now to hand over to George to run here through the financials of our group for 2020 in a greater detail. Thank you.

Thank you, Aris, and thank you all for joining us. I would like to present the 12 months results by following some slides from our full year 2020 group results presentation. On Page 3, we have the highlights of 2020 results. Group EBITDA stood at EUR 30 million in 2020 compared to EUR 81 million in 2019, posting a reduction of 63% or -- excuse me, or EUR 51 million, mainly due to Concessions and Construction, which were down by EUR 33 million and EUR 32 million, respectively. On the other hand, the better performance of RES by EUR 24 million, partially offset this reduction. Moreover, EBITDA includes nonrecurring transformation cost of Construction with negative impact of EUR 41 million, out of which, EUR 6 million of restructuring costs; EUR 13 million due to impairment loss from sale of real estate assets; and EUR 22 million stop loss due to exit of loss-making PV projects. In Q4 '20, EBITDA was at minus EUR 81 million versus minus EUR 71 million in Q4 '19. The cash flow exercise has been performed in Construction in order to define its cash flow needs, and for that reason, several construction projects were assessed. As a result, Construction posted losses of EUR 112 million in Q4 '20, mainly in Romania, minus EUR 37 million, and in Greece, minus EUR 23 million as well as from the closing settlement of a project in Middle East, minus EUR 20 million, and a stop loss of minus EUR 16 million due to exit of loss-making PV projects. Cash and liquid assets stood at EUR 406 million at the end of December 2020 versus EUR 400 million at the end of June and EUR 463 million at the end of 2019. Turning to Page 4. We can see an overview of contributions to performance per segment focusing on revenue and EBITDA. Construction has been historically the largest contributor to group revenue, accounting for 55% of total revenue based on 2020, down from 69% in 2019. On the contrary, as we can see on the right-hand side, group EBITDA is driven by Concessions, RES, Environment and Real Estate, which have a proven robust and resilient EBITDA generation profile. These 4 businesses have generated EUR 201 million in 2020, despite the fact that Concessions has been impacted from COVID-19 due to restrictions on movement. All those segments are highly cash-generative and self-funded. Turning to Page 6 of our presentation. Group net revenues stood at EUR 892 million in 2020 compared to EUR 1.274 billion in 2019, a reduction of EUR 381 million. The year-on-year decrease came mainly from the Construction sector, where revenues decreased by EUR 402 million from EUR 901 million to EUR 499 million and Concessions, which decreased by EUR 38 million from EUR 240 million to EUR 202 million. This decrease was partially offset by increases in RES and in Environment by EUR 30 million and EUR 50 million, respectively. Profit before tax in 2020 stood at minus EUR 150 million versus minus EUR 84 million in '19, while Q4 '20 profit before tax was at minus EUR 126 million versus minus EUR 115 million in Q4 '19, mainly due to losses of construction. On Page 8, you can see that the net debt, excluding Moreas debt, who has a nonrecourse debt, stood at EUR 725 million at the end of 2020, compared to EUR 608 million at year-end 2019. Net debt-to-EBITDA ratio standing at 24x, that includes EUR 42 million of Construction-related restructuring costs as well as EUR 80 million from assessment of projects and closing settlements in Q4 '20 as described above. Excluding those amounts, net debt-to-EBITDA standing less than 5x. On Page 10, we have the analysis of P&L for 2020 and 2019. Going on Page 11 is presented the evolution of cost items. Cost of goods sold is down in full year '20 by 28%. The number of employees is down by 5% year-on-year including the acquisition of ASA in the Environment sector in Q1 '20. Moreover, Construction, which is undergoing a transformation exercise, the total reduction of employees is 21% year-on-year. In total, 2,870 employees at year-end 2020. The benefits of that decrease will be visible in 2021. Administrative expenses in full year '20 were at EUR 66 million, down by 7% compared to full year '19. Administrative expenses include restructuring costs for Construction of EUR 6 million. Without this cost, admin expenses stood at EUR 60 million, a reduction of 15% year-on-year. On Page 14, total assets were at EUR 2.822 billion at the end of December 2020 versus EUR 3.056 billion at the end of 2019, recording a delta of minus 8%. Group's total equity stood at EUR 332 million at the end of '20 compared to EUR 533 million at the end of '19, a decrease of EUR 201 million due to losses after tax mainly. Total equity attributable to shareholders was at EUR 230 million versus EUR 414 million at the end of 2019. On Page 16, we present the evolution of the cash and liquid assets, which at the end of 2020 stood at EUR 406 million versus EUR 400 million at the end of June, and down from EUR 463 million at the end of 29. On the right-hand graph, you see the quarterly evolution. In Q3 '20 and Q4 '20, operating cash inflows amounted to EUR 43 million and EUR 11 million, respectively, a significant improvement compared to both Q1 and Q2 '20. In Q4 '20, investment cash inflows amounted to EUR 13 million, cash outflows from financing activities reached EUR 12 million in Q4 '20. For the full year '20, operating cash outflows amounted to EUR 24 million versus EUR 114 million in the previous year and include EUR 88 million of interest and related expenses as well as decrease in liabilities of EUR 78 million. Investment cash flows amounted to inflows of EUR 24 million versus outflows of EUR 95 million the previous year, and includes cashing of time deposits of EUR 35 million, proceeds arising from EIB bond of EUR 22 million, proceeds of the sale of real estate assets of EUR 11 million, and Hellas Gold also of EUR 7 million as well as the following CapEx: RES, EUR 14 million; Environment, EUR 3 million; Construction, EUR 2.6 million, Real Estate, EUR 1.2 million; and Concessions, EUR 30 million, mainly due for concession right for development of new Alimos Marina. Cash inflows from financing activities were 0 versus EUR 27 million in the previous year and mainly include: A, proceeds from the high-yield bond tap of EUR 70 million in the beginning of the year of 2020, and EUR 35 million from Real Estate and EUR 14 million in RES; B, outflows of EUR 45 million, mostly from dividend distribution to minority shareholders of Attiki Odos. Now let me go through the segmental analysis of 2020. On Page '19, related to the Construction sector, the group has continued its strategy focusing on new construction projects in Greece and Romania as well as facility management services in Qatar. Backlog stands at EUR 1.8 billion, including projects where AKTOR has been declared preferred bidder. Circa 98% of the backlog is related to the 3 mentioned countries as you can see on the bottom left side. 2020 EBITDA in Construction stood at minus EUR 155 million, including the following nonrecurring items relating to the transformation of the segment. EUR 30 million impairment loss from sale of nonoperating assets, EUR 22 million from exit loss-making international PV project, EUR 0.6 million restructuring cost also. In 2019, EBITDA was at minus EUR 123 million. The analysis per region of the loss of EUR 155 million for the full year 2020 is the following: minus EUR 43 million from international PVs, including the EUR 22 million that I mentioned before, from the transformation impact from exit loss-making projects; second, minus EUR 42 million from Romania, including EUR 37 million loss from 1 motorway project, namely Sebes, which suffered from legacy issues as our local partner were bankrupt, et cetera; third, EUR 20 million loss from Greece, mainly from the assessment of projects related to the cash flow exercise; fourth, EUR 24 million loss from Middle East, including EUR 20 million due to closing settlements of Doha Golf line projects; fifth, EUR 8 million loss from Serbia, mainly due to one-off expenses of EUR 4 million; and last, EUR 10 million loss from other countries, including EUR 8 million from impairment loss of the nonoperating assets of Real Estate. On Page 20, we show an update of the transformation journey, which will generate an upside of approximately EUR 70 million till end of 2023 since 2021. As you can see, the program is on track, while we have taken recently additional cost-cutting measures. Moving on Page '21, in which we have the Concession highlights. Revenues stood at EUR 240 million in 2020 versus EUR 202 million in 2019. The decrease of revenues in 2020 is due to the decreased traffic as a result of restrictions in movement and eventual full lockdown by the state in response to the COVID-19 epidemic. Attiki Odos traffic reduction was at 24% for 2020, while revenues were down by 21%. Moreas traffic reduction was at 23%, while revenue dropped by 21%. As you see on the bottom left diagram, there were clear signs of gradual improvement in Attiki Odos traffic between early May '20 and August '20. Additional measures followed in September, causing further downward pressure on traffic volumes, bringing the full year impact at Attiki Odos to a traffic decrease of 24%, as I mentioned earlier. The impact of lockdown measures is still ongoing in 2021. Year-to-date traffic in Attiki Odos was down by 30%, while in the last week, is up by 28%, as we now compare with the last year's lockdown, which was more strict. Concessions EBITDA amounted to EUR 120 million in 2020 versus EUR 152 million in 2019, marking a decrease of 22%. On Page 22, we present the RES highlights. Revenues stood at EUR 94 million in 2020 versus EUR 64 million in 2019 or up by 47% year-on-year due to increased installed capacity of 493 megawatts as of end of December '20. As we have indicated, the growth plan for the Renewables business is underpinned by the recently announced strategic agreement with EDPR. EBITDA stood at EUR 73 million in 2020 versus EUR 50 million in 2019 or up by 47% year-on-year due to the increased toll capacity. EBITDA is negatively impacted by EUR 2.5 million from one-off levy on RES producers, i.e., without it, would have been at EUR 75.5 million. On Page 23, we have the Environment segment highlights. Revenues stood at EUR 102 million in 2020 up from EUR 87 million in 2019 or plus 16% year-on-year due to the increased completion rate of construction projects. EBITDA stood at EUR 4 million in 2020 versus EUR 7 million in 2019, negatively impacted by one-off items of EUR 7 million, out of which EUR 3.2 million in Osnabruck's project, EUR 2.7 million from a court decision related to 2010 case and EUR 1.2 million from one-off levy on the RES producers. Lastly, on Page 24, we have the Real Estate highlights. Revenues stood at EUR 6.8 million in 2020 compared to EUR 7.1 million in 2019. EBITDA stood at EUR 3.9 million in 2020 versus EUR 2.6 million in 2019 or plus 48% year-on-year despite the impact of COVID-19. This business was significantly impacted by COVID-19 measures with Smart Park footfall decreasing by 30% during 2020, despite Smart Parks' double advantage of being an open air retail park, making it safer than closed space malls and by the fact that stores were open on Sundays from May to October 2020. This concludes my presentation of group and segment performance, and I would like to now open the floor for questions. Thank you.

[Operator Instructions] The first question is from the line of Memisoglu, Osman with Ambrosia Capital.

Regarding the losses in the construction segment, can you give us some color on how much of these were noncash, i.e., how much cash payments are you liable for, I guess, sometime during 2021, if you could give us some color on timing? That's the first question. Maybe if you want to take that one first.

Yes. Regarding the cash in Q4, the loss has been recognized. Those losses have been incorporated in the capital plan and the capital raise proposal that we have provided to the market and general assembly a few weeks ago. So if you see, we have derived that EUR 45 million has to be cash for the national mainly PV projects, and roughly EUR 55 million has to be for settlements and payments of Greek counterparties. So those have been already taken incorporation on the cash flow needs of AKTOR, as we have already presented.

You said Greek, does it also include the EUR 37 million for Romania?

That includes also the losses that we have recognized abroad for other projects, yes.

Got it. So none of this has been paid yet. The Q4 -- Q4 has been just provisioning, right?

Q4 was provisioning, and we have already the cash flow or the local depending Romania project program. They have also producing the collections, et cetera, in order to provide the needed liquidity, which has been incorporated in our plan.

Got it. And then moving on to the Renewables segment. Apologies I missed that, but you mentioned the one-off item in Renewable EBITDA, I guess.

EUR 2.5 million relates to the levy.

Okay.

On top, we have some levy of EUR 1.2 million in Environment, which has biogas renewable energy production.

Okay. So does that mean that was going to be my next question. In Environment, the underlying EBITDA then is what loss of EUR 4.2 million, is that for Q4?

As I mentioned, we have 3 one-off items. We had a court decision that was in place, which was not -- and that was EUR 2.7 million. This is one-off. The EUR 1.2 billion of the levy, and we have also recognized some loss from German business of EUR 3.2 million. So these are 3 items that we define as one-off. Otherwise, it was improved by EUR 7 million, incorporating those 3 items.

Got it. All these were for Q4. Okay.

Correct.

Next question is from the line of Chatzidakis, Manos with Beta Securities.

Just 1 question about BIOSAR. Will the capital raise cover all the losses we saw from BIOSAR? And what are the management plans regarding BIOSAR liquidation expansion? Do you have any plan ahead?

Yes. On the capital plan that we have provided, that incorporates the EUR 45 million. It's already, as I mentioned before, in our numbers. So there's nothing additionally. Our strategy for international business, including the PV, is to reduce smoothly our exposure, and this is what we are doing as we speak.

The next question is from the line of Gkonis, Argyrios with Axia Ventures.

Couple of questions from my side. First one on Concessions. Are you seeking to cash in any type of compensation for the impact of COVID on your motorways for 2020 and potentially for the beginning of 2021? We have seen similar provisions by some other companies. And the second question has to do with the projects in Romania. And what I'm trying to understand based on the impairments that you already took, can we consider that the current projects that we see on the backlog are clear of any legacy potential implications?

Yes. Regarding your first question, yes, we are in the process in order to receive -- to request an amount related to the lockdown. We are insured with a well-known insured company, and this is a process that we are working. So that applies to Attiki Odos and to Moreas. So we are in a process which will take some time, in order to finalize and define the numbers, but it will take some time ahead. Regarding the second question, the project that we have recognized losses that was on Sebes, which is a motorway. It's a legacy issue from the past, which has to be completed by mid of this year. The rest of the projects that are in place are mainly railway, in good shape, new, with a good profit. And I have to say that the track record in Romania in railways has been as a result with good profitable margins at the end. So we have a good track record in the project that we had in the past, and we see the same to be the case of the projects ahead.

A small follow up, if you may. I noticed on the breakdown of net debt that you provide that you're now including Attiki Odos net cash position within the Concessions portfolio. Is my understanding correct?

As you can see on Page 15, we have the analysis per segment. On the Concessions, we have excluded Moreas. This is Page 15. We have the total [ corporate debt ] in Moreas, because Moreas has the nonrecourse loan, the EUR 443 million with a cash level of EUR 30 million, cash and liquid assets, and this is what we exclude.

Okay. So I'm just saying because in the past, you used to exclude that Attiki Odos as well in the part of the corporate debt. If you could give us -- if you have the number, what was the cash position of Attiki Odos at the end of 2020?

Yes. If you see from this presentation, I don't have it in front of me. The majority are coming from the Attiki Odos. But in the past, the debt of Attiki Odos were higher has been repaid. If you see on Page 15, Attiki Odos debt is roughly EUR 0.3 million, so no debt. So the cash is there on Attiki Odos without a debt in place.

Okay. So that's essentially in the context that you consider now going forward, the Attiki Odos cash as recourse type of item, something that you can have access on?

Direct or indirect, you can have this type of approach., yes.

[Operator Instructions] We have a follow-up question from the line of Mr. Memisoglu, Osman with Ambrosia Capital.

Yes. Just following up on your RES slide comments. You mentioned the additional 88-megawatt being constructed now to be completed in 2022. So will that capacity still enjoy the high level of tariffs? Or I mean, are you getting an extension from the government? What's the latest there, please?

We sum that it's in process -- in progress. We cannot provide a specific answer right now. So we have to see how that will be settled before we say something specifically.

If you don't get an extension, could you remind me, do you -- does it go to 70s? Or is it...

Is that -- it goes steps, it was 93 and then 70, but we have to see how that will be settled before we provide more details on that.

The next question is from the line of Kogge, Maxime with ODDO BHF.

Unlike the previous quarters, you didn't disclose any specific information for the restricted perimeter. So when do you expect to do that? And can you at least provide us EBITDA and net debt for the restricted perimeter? This is my first question. And the second question, I'm referring to the Slide 26 -- no, sorry 27, on the interim financing solution. I would like to know who are the shareholders who are expected to subscribe to the internal financing?

On your first question. According to the note, the date to be published will be till the end of April. So we will announce the date to publish the financial statements of the restricted group. So we'll follow shortly. Regarding your second question about the interim financing, what was exactly the question, can you repeat it?

Yes. I mean you were saying that the loan will be marketed to existing major shareholders so I was wondering who were the shareholders that's expected to fund the loan?

As you can, Eurobank is acting as a mandate arranger. So has this mandate to try to find interested parties from the stockholder base, definitely from potential banks in order to participate. So this is the process, and we will have news very soon.

[Operator Instructions] The next question is from the line of [indiscernible] with Prelium Investment Services.

From what we can see here is basically the major concern of the management, I'm guessing, is the Construction part of the group. In case -- because we're going through this capital raise in the next couple of weeks, in case this does not be successful, is there a second -- is there another plan for concerning the AKTOR construction company? And do you believe there will be, if any, any impact on the security or the safety of the Ellaktor bond if the capital raise doesn't go through?

Well, on the first part of your question, let me jump in and say that certainly, the upcoming general assembly is a crucial general assembly. I don't know if you have been with us during the last call that we had in regards to the share capital increase. During that time, I remember receiving the same question. And allow me to say that my answer would be more or less the same in the sense that not getting through this is not an option. I think it's more than clear that the Construction sector is faced with very demanding and pressing funding needs, which actually is justified by the initiatives that we have taken in regards to the interim financial solutions that we have just discussed. The needs -- the financial needs for -- the liquidity needs from -- for the construction business line, we think they are quite important. However, we feel that we have identified the needs in a pragmatic and realistic manner. The number that we have shared with you of EUR 120.5 million share capital increase, out of which EUR 100 million will be directed to the Real Estate -- to the Construction side, actually reflects in each of the Construction business. As I said, this has been the outcome of our exercise regarding the projects, the progress, the budget, the initiatives related to the relationship -- our relationship with suppliers and subcontractors, exercise related to obligations to our suppliers and total receivables. So it has been a very complex and thorough exercise. And we feel strongly that the proposal of the Board reflects the needs of the Construction. On the basis of that and considering that we have -- we believe we have a strong shareholders base, I think going forward and have the general assembly approving the proposal of the Board is a must. I think I would say that the Construction business is in a turning point. And it lies entirely in the hands of the shareholders to unleash the competencies and the expertise that the Construction business has and to put the Construction business into a very solid place in order to capture the -- quite a lot of the new business and new projects that will be financed by the new funds during the course of the upcoming years.

Okay. Saying that, if I may -- yes, my apologies. Saying that you have a strong shareholder base, unfortunately, we've been reading the last couple of weeks, it seems that there is a small conflict between the major shareholder and the current management, along with the shareholders that support this management. How does the management approach this whole situation? And is there any way that you can put an end to this conflict for the sake of all the shareholders and for the insurance of a bright future that Ellaktor might have?

Let me start by saying that current management has been most recently appointed, as you know. It has been appointed through a legitimate general assembly with majority voting. I would say very openly that challenging the management in such a short notice, is not good for the group, is not good for our people, is not good for the -- eventually for the market itself. As far as the relationship among the shareholders, this is not for the management to somehow influence. We're not a spokesman of shareholders. Our obligation is towards shareholders to try to reflect the financial positions of the group in a very realistic and pragmatic manner and to come up with ideas and initiatives that will ring-fence the performance and the operations of the group. And this is what we have done. In regards to the shareholder increase, the bridge financing, most of the initiatives that we have taken in regards to the business model.

We have a follow-up question from the line of Kogge, Maxime with ODDO BHF.

Yes. So regarding the Construction unit, so you will be cashing out around EUR 100 million this year, corresponding to the proceeds of the capital increase. What will be approximately the time line for spending this amount because you're raising a EUR 50 million interim loan right now? So it means that you will cashing out EUR 50 million in the first half and then another EUR 50 million in the second half. Am I right considering that? And beside this exceptional cash outflow, do you aim for a neutral or even positive cash flow for Construction this year? Or is it too early to aim for that?

So the plan is for the EUR 50 million interim financing now from third parties, from shareholders and banks as we described. And then by mid of the year, June, July, to have the capital raising of EUR 100 million, which will repay this EUR 50 million. So additional EUR 50 million will be remain on the construction. Of course, with the plan, we're expecting following that to be at the end of the year to be cash flow neutral by using this cash during this year. But the run rate from the end of the year to start at neutral position.

Okay. So it means that the cash burn for the Construction division in 2021 will be EUR 100 million, more or less?

Yes. That includes -- as we have described, that includes the plan that we have in place and that incorporates also some cash buffer, which incorporates in the cash that we have provided as request [ to the AGM ].

The next question is from the line of Hatiris, George with Solidus Securities.

During the last quarter as you mentioned supplier haircut, which has caused serious concerns. What are the actions that the management will take to ease the concerns of the suppliers, especially when such financing has been ensured?

Please complete the second question in order to...

The second question is, is there going to be a similar negotiations abroad for example, in Romania?

Thank you. Actually, just to clarify, we haven't mentioned in any call for any haircuts. In the past, we have read that, that was the progression from the news from the press, but we have never communicated in any call, in any discussion with any -- for any haircut at all. So this is not on the table. We have discussing to negotiate to extent and how to settle. That's it.

[Operator Instructions] The next question is a follow-up question from [indiscernible] with Prelium Investment Services.

I wanted to ask if there is a significant impact for the loss of the project in Egnatia Odos. And if there is an impact concerning the business plan of the entire group, and is anything in your mind concerning any maybe legal actions or I don't know, something similar towards REDS that -- for the mentioned project that took...

Well, the Egnatia motorways, the results of our potential assumption of running the concession of Egnatia motorway has not been in our numbers. Bear in mind that the approval of the final bidder is a long process because it requires quite a lot of approvals related to financial agreements, approvals from the side of the privatization agency, approvals from the side of the court of auditors, potential approvals from the Greek partner, [indiscernible]. So it's a long process that -- from experience, I would say that you should expect the finalization of the transactions by the end of 2022, at least on the second half of 2022. And you can imagine that following that approval, the start of imminent works and the constructions would require also sometime in order to receive the appropriate payments from the competitive authorities. So it's a long process. Until we can actually incorporate the impact of that specific project into our numbers provided, of course, that we would have the opportunity to bid. Now in regards to REDS, I think it's been in the news most recently. This has been a very a surprising development. Surprising because the teams on both sides have been working very tightly to try to get prepared for the final bid. Unfortunately, it seems that, REDS considering both the losses that it seems the -- we are incurring in operations already in place, but also reassessing the risks related to COVID. They decided to drop down. And unfortunately, what left with the minimum flexibility. However, I need to share with you that following the announcement from their side, we have addressed the privatization agency right in the next day, requesting permission for us to independently submit our bid. And if that would not be -- wouldn't be possible at least, provide us with a few weeks' extension in order to be able to submit our bid. We were informed yesterday that the privatization agency has not granted their approval. On our side, what we did was to appeal -- to file and appeal before the privatization agency and an application for interim measures before the council of state, and we're awaiting to see how that hearing will develop.

[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you.

Yes. Thank you. Ladies and gentlemen, there has been quite a lot of discussions about the liquidity needs of the Construction business and also in regards to our initiative to that respect. So allow me to close our today's call with some reference to that point. I need to underline that in order to address the pressing funding needs of the Construction, the management has initiated as we have just discussed, a bond issuance of EUR 50 million, which is considered as the absolute minimum amount for returning to normal operating activities. Eurobank is acting as the bond agent, has already initiated the marketing of the bond to major shareholders. Preliminary bond terms include 12-month duration at 6.375% interest coupon and full repayment following the successful share capital increase at the ELLAKTOR level. Let me remind you, as we have said, once again, that EUR 100 million out of the EUR 120 million will be used for the share capital increase of AKTOR construction. The above interim bridge financing plan alongside the successful completion of the EUR 120.5 million share capital increase constitute the necessary preconditions for AKTOR construction to capitalize on the upcoming very attractive macroeconomic backdrop and for group's all business units to pursue strong growth opportunities. On that ground, allow me to take this opportunity and strongly urge all shareholders to share their duty of care to the company and to the people of Ellaktor and to vote in favor of the proposed share capital increase in the general assembly of the coming Friday. I thank you all for your time and your presence in our today's discussion. Thank you.

Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephones. Thank you for calling and have a pleasant evening.